United six-month leasing policy rescinded

Jan. 10, 2013

Updated Aug. 21, 2013 1:17 p.m.

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United Mutual residents were offered priority seating at the United Mutual meeting in the Board Room on Tuesday. Overflow attendees were sent to the Redwood Room. Members were in attendance for a vote by the board on the six-month lease restriction. The vote passed and is subject to a 30-day notification period. BARBARA POTTER, LAGUNA WOODS GLOBE

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Because of the overflow in the Board Room, United Mutual residents watched the broadcast of Tuesday's board meeting in the Redwood Room. Here they applaud the board's decision to rescind the six month lease restriction. BARBARA POTTER, LAGUNA WOODS GLOBE

United Mutual residents were offered priority seating at the United Mutual meeting in the Board Room on Tuesday. Overflow attendees were sent to the Redwood Room. Members were in attendance for a vote by the board on the six-month lease restriction. The vote passed and is subject to a 30-day notification period. BARBARA POTTER, LAGUNA WOODS GLOBE

After nearly three hours of contentious debate, the United Laguna Woods Mutual Board of Directors voted Tuesday to rescind the resolution that limits the term for subleasing a unit to six months. The 8-2 vote came before a capacity crowd of members eager for a resolution on an issue that has been at the forefront of United Mutual meetings for two years.

Board member Phil Doran, whose Protect Property Values (PPV) club advocated rescinding the leasing policy, said he was gratified by the vote. "There was a great well of support within United Mutual for the change in the resolution because people are suffering. Democracy is messy, loud and sometimes offensive, but on this day it triumphed."

During public remarks, United members took to the podium to discuss the pros and cons. Many said they supported rescinding the policy due to the burden the inability to rent long-term puts on homeowners. "If something happens to my husband and me, I want my kids to be able to afford to rent it full time, or move into it," said Charlene Sydow.

Others, like Diane Casey, were in favor of putting the issue to a membership vote. "We're on a slippery slope. It's not just the property values; it's keeping our senior status here."

Opponents, however, said they feared rescinding the policy would turn the owner-occupied retirement community into a rental community, and they would lose control of who lived in their Mutual.

Just prior to the vote, United's corporate attorney Sandra Gottlieb stunned the audience with an announcement that if the motion to rescind the current leasing policy was approved as written, it would bring United Mutual back to 1984, when there was a prohibition on rentals.

"If you vote yes on this, you wind up with no rentals in this community for any reason whatsoever," Gottlieb said. "That is our official position based on (new California legislation)." She added that should the Board vote in favor, she is confident there would be litigation.

But Doran disagreed, saying he had consulted with four attorneys and Sen. Lou Correa, who authored the bill, and they agreed reverting back to the original bylaws would be in violation of the new legislation. He said there is no mention of any lease restriction in the original bylaws or Occupancy Agreement, so her argument was incorrect.

Prior to 1984, United Mutual was exclusively owner-occupied. But through an agreement with the U.S. Department of Housing and Urban Development, United Mutual began allowing residents to sublease their units for up to six months in a 12-month period. Doran and several others formed the PPV club in February 2011 to challenge the leasing restrictions. The issue began to garner a groundswell of support, which led to board meetings so contentious that in December 2011, the Board restricted public comments on the issue because they said people were intimidated.

Earlier at Tuesday's meeting, a motion proposed by Catherine Brians to put the issue of a 12-month renewable lease to a membership vote failed. Brians later cast one of the dissenting votes on rescinding the lease restrictions. "I am offended and concerned about why it has been decided by a 'board within this board' with outside attorneys when you all know that the United attorney is being paid to protect this corporation."

Charles Hammer also opposed rescission, saying it was the "first step in an effort by a special interest group to change United from an owner-occupied senior community into an investor-renter business." Hammer later called the discussion a 'good struggle'. "I was glad to see views from both sides be presented, rather than it being one-sided, as it has been."

Gottlieb's bombshell likely caused at least two board members to change their planned vote. "Based on the clarification from our legal counsel, that would put the policy back to 1984, which means no rentals," John Dalis said. "On that basis I'm going to vote for it." Mary Stone agreed. "I'm going for it!"

After the meeting, Gottlieb stated that the vote taken was on a proposed Rule Change. "The Board must now provide the opportunity for members to comment on the proposed Rule Change for a period of not less than 30 days....The Board could vote on this motion at the Feb. 12 board meeting."

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